In the know: Where to start when planning to sell your business

Maybe it was always the plan or maybe you’ve never thought about it. We know you’ll want the maximum value for your business but what’s driving your decision to sell? Perhaps it’s time to take some risk off the table, or you feel ready to step back. Alternatively you might want to pursue a new business adventure, and the sale of your current business will help fund it. Or perhaps you want to invest more time and money into charitable organisations that will impact generations to come. Holding your objective in sight and presenting a positive story for why you are exiting will help navigate the process of selling your business, as you work towards your end goal.

Top Tip: Keep the reason for selling your business at the forefront of your mind throughout the process. Does the proposed exit strategy bring a sense of closure and allow you to plan for the future? If not, perhaps you haven’t found the right buyer yet or it’s not the best time to sell.

It may seem pretty straight forward, but what are you really taking to market?

Are you planning on selling the whole company? Are there parts of the company a buyer doesn’t find so attractive? Perhaps you might want to keep the properties. And what happens if the business carries your family name - is that part of the sale? It can be difficult to see your business in the hands of another. It can also be hard for you to identify where an external buyer may recognise the value in your business. Try to step back and take an objective look at the value a buyer will see in your business. Consider what you would look for and the questions you would ask if you were looking to acquire another business and bring into the fold of your existing company. Make sure all the nuts and bolts like data, contracts, systems and procedures are transparent and visible. Being able to explain the track record of performance and profitability while demonstrating future potential should help attract buyers and set the path to a better deal.

Top Tip: Have an elevator pitch ready on why and what you are selling, making sure your team understands it from the get-go. As you tell your story to interested parties, this consistency will give the narrative confidence.

There are many questions and no fixed blueprint for selling a business, but here are some common points worth considering based on our years of experience.

Think about the buyer’s background and motivation. For example, your business may interest a trade buyer (someone looking to extend their market/product share), or a financial buyer (someone looking to grow investment potential). It may be that someone from within your own company is interested in taking the reins for a price or perhaps you’re courting a bid from overseas from a previous customer. Whatever the reason, it’s important to appeal to their ambition to get the best deal.

Most common types of sale

1. Trade sale (usually to another company in the same sector)

2. Exit to private equity, selling a partial stake with a phased transition

3. Employee ownership trust or a management buyout

4. Family succession: could someone in the family taking over be the best option? 

Top Tip: Make sure your management team is prepared enough for whatever type of sale you pursue, and can cope with your departure without damaging the value of the business. Your people are a huge asset when it comes to making a sale. Are they as ready for the challenge as you are?

Picking exactly the right time in your business or market cycle isn’t always easy. However, being ready to go when the time is right can make a real difference to the value you achieve and to the on-going potential of the business.

Assembling a team around you that has the right expertise and that you trust is key. When looking for advisors, judge their track record of handling sales in your sector and working with businesses of your size. Their experience is vital, as well as personal chemistry and a sense that they understand you and your business. Don’t forget to have a plan for communication across the whole business; sharing updates that keep people informed and well equipped for the road ahead. News of a potential sale can often affect employee and customer sentiment.

Top Tip: Recruit the right team of advisers. Consider how others in your sector have managed their sales and how you could replicate their successes.